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Ultra Petroleum (UPLMQ) Down to Strong Sell: Here's Why
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On Dec 27, 2016, Zacks Investment Research downgraded natural gas producer Ultra Petroleum Corporation to a Zacks Rank # 5 (Strong Sell).
The rating downgrade reflects that the company is likely to perform below its peers and industry levels in the coming months amid the unfavorable scenario created by the currently weak sentiment for the commodity.
Ultra Petroleum Corp. is a Houston, TX-based independent oil and gas company that engages in the acquisition, exploration, development, operation, and production of oil and natural gas properties.
Year to date, the Zacks categorized U.S. Oil and Gas Exploration and Production industry has registered growth of 6.03%. However, shares of Ultra Petroleum have outperformed the industry by registering outstanding growth of 189.75%.
Crude oil, which is a major indicator of global economic growth, suffered a massive setback in recent times. The commodity tumbled to a 13-year low of $27 per barrel in Feb 2016 due to a supply glut amid lackluster demand. Though the commodity recovered significantly and touched the $50 per barrel mark after most of the leading oil producers hinted at a substantial cut on crude production, the pricing scenario for oil remained tepid in terms of year-over-year comparisons.
With crude prices remaining weak for a prolonged period of time, Ultra Petroleum’s upstream division has been able to extract less value for its products. This has resulted in significant losses for the unit.
Also, Ultra Petroleum’s high natural gas exposure increases its sensitivity to gas price fluctuations than its more-diversified independent peers with higher oil production. The company, which derives more than 95% of its reserves/production from natural gas, has seen its sales and income fall drastically in the recent quarters due to a sharp drop in gas prices.
Ultra Petroleum currently generates almost all of its revenues, earnings and cash flow from activities in the Pinedale and Jonah fields in Wyoming. Consequently, any significant downtime related to pipelines or processing plants in the region could affect the company’s results.
Stocks to Consider
Though we see little reason for investors to own the Ultra Petroleum stock, some better-ranked players from the broader energy sector that warrant a look like Braskem S.A. (BAK - Free Report) , Suncor Energy (SU - Free Report) and McDermott International Inc. . All these stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
In the last four quarters, Braskem posted an average positive earnings surprise of 105.5%.
Suncor, on the other hand, delivered an average positive earnings surprise of 40.55% in the last four quarters.
In the last four quarters, McDermott posted an average positive earnings surprise of 250.00%.
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Ultra Petroleum (UPLMQ) Down to Strong Sell: Here's Why
On Dec 27, 2016, Zacks Investment Research downgraded natural gas producer Ultra Petroleum Corporation to a Zacks Rank # 5 (Strong Sell).
The rating downgrade reflects that the company is likely to perform below its peers and industry levels in the coming months amid the unfavorable scenario created by the currently weak sentiment for the commodity.
Ultra Petroleum Corp. is a Houston, TX-based independent oil and gas company that engages in the acquisition, exploration, development, operation, and production of oil and natural gas properties.
Year to date, the Zacks categorized U.S. Oil and Gas Exploration and Production industry has registered growth of 6.03%. However, shares of Ultra Petroleum have outperformed the industry by registering outstanding growth of 189.75%.
Crude oil, which is a major indicator of global economic growth, suffered a massive setback in recent times. The commodity tumbled to a 13-year low of $27 per barrel in Feb 2016 due to a supply glut amid lackluster demand. Though the commodity recovered significantly and touched the $50 per barrel mark after most of the leading oil producers hinted at a substantial cut on crude production, the pricing scenario for oil remained tepid in terms of year-over-year comparisons.
ULTRA PETRO CP Price and Consensus
ULTRA PETRO CP Price and Consensus | ULTRA PETRO CP Quote
With crude prices remaining weak for a prolonged period of time, Ultra Petroleum’s upstream division has been able to extract less value for its products. This has resulted in significant losses for the unit.
Also, Ultra Petroleum’s high natural gas exposure increases its sensitivity to gas price fluctuations than its more-diversified independent peers with higher oil production. The company, which derives more than 95% of its reserves/production from natural gas, has seen its sales and income fall drastically in the recent quarters due to a sharp drop in gas prices.
Ultra Petroleum currently generates almost all of its revenues, earnings and cash flow from activities in the Pinedale and Jonah fields in Wyoming. Consequently, any significant downtime related to pipelines or processing plants in the region could affect the company’s results.
Stocks to Consider
Though we see little reason for investors to own the Ultra Petroleum stock, some better-ranked players from the broader energy sector that warrant a look like Braskem S.A. (BAK - Free Report) , Suncor Energy (SU - Free Report) and McDermott International Inc. . All these stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
In the last four quarters, Braskem posted an average positive earnings surprise of 105.5%.
Suncor, on the other hand, delivered an average positive earnings surprise of 40.55% in the last four quarters.
In the last four quarters, McDermott posted an average positive earnings surprise of 250.00%.
Zacks' Top Investment Ideas for Long-Term Profit
How would you like to see our best recommendations to help you find today’s most promising long-term stocks? Starting now, you can look inside our portfolios featuring stocks under $10, income stocks, value investments and more. These picks, which have double and triple-digit profit potential, are rarely available to the public. But you can see them now. Click here >>